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As heat wave spreads, spot power prices shoot through roof

Govt has decided to augment coal supplies to Centre, state power plants and independent power producers with immediate effect till June 30

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With the summer heat peaking up, electricity spot prices too have been on an ascend in the current month because of rising power demand and lesser coal supply to thermal power plants. The development has prompted the Centre to take a decision to increase coal supply to plants, atleast till the monsoon sets in.

As per data available with the Indian Energy Exchange, the spot prices has only been increasing in the month of May. A look at power prices over the past one week shows a sharp hike in per unit rates.

On May 17, the per unit rate (7AM-6PM) was Rs 4.67/kwh in north India, which increased to Rs 5.68/ kWh and Rs 6.83/kWh, respectively in the next two days. On Monday, it touched Rs 8.41/kwh per unit.

The average power price (entire 24 hours) traded for north India was Rs 4.75 per unit on May 17, which shot up to Rs 7.43/kWh on May 21. Likewise, the average spot price for rest of India was Rs 4.51 per unit which subsequently increased to Rs 5.96/kWh on Monday. In May 2017, the average power price was just less than Rs 3 per unit.

According to an expert, the surge in demand was seen in April as well when about 2% more power was sought on the IEX, resulting in a new high in power price.

"The average Market Clearing Price at Rs 3.98 per unit saw a decline of 1% over Rs 4.02 per unit price in March 2018 and 44% above Rs 2.77 per unit in same month last year. The spot market prices though firm remained less than Rs 4 per unit. The key reasons for high prices were: increase in demand associated with seasonal variation and inadequate availability of coal with the thermal generators," an IEX report said.

Similarly, demand for more power earlier this month was evident in states like Maharashtra, Gujarat, Bihar and West Bengal, which prompted them to increase their short-term power purchases.

On Tuesday, the Indian Meteorological Department warned that a heat wave would prevail in the next few days in Maharashtra, Rajasthan, Punjab, Haryana, Delhi and Uttar Pradesh, with temperatures expected to rise up to 48 degrees celsius in certain places, and may rise above 37 degrees celsius in coastal regions. This will only lead to further increase in electricity rates and obviously push up demand.

"This sharp increase in spot prices is due to demand-supply gap in power as well as coal needed to generate electricity. This is what led the government to take a review last weekend, wherein they decided to step up coal supply to the power plants," said a Mumbai based analyst.

In a review meeting on Friday, Piyush Goyal, Minister of Coal, stressed on the need to increase Plant Load Factor (PLF) of various thermal power plants, adding that all pithead plants with sufficient coal supply should run at 100% PLF.

Fortnightly meetings will also be held to review the power situation in India.

In the same meeting, it was also decided to augment coal supplies to Centre and state power plants and independent power producers with immediate effect till June 30 to overcome shortage of the dry fuel and check power crisis. Moreover, Ministry of Railway has been asked to accord high priority to rakes headed to the power plants so that coal supply doesn't get delayed.

As per Central Electricity Authority's data on May 17, 24 non-pit heads plants were facing coal shortage out of monitored 114 plants. Of these 24 plants, 18 of them had coal stocks for less than four days and classified as super critical while other six had coal stocks for less than a week and categorised as critical ones.

...& ANALYSIS

  • Govt has decided to augment coal supplies to Centre, state power plants and independent power producers with immediate effect till June 30
     
  • Of the 24 plants, 18 had coal stocks for less than four days while other six had coal stocks for less than a week
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